SENATE FILE _____

BY  (PROPOSED COMMITTEE ON AGRICULTURE BILL BY CHAIRPERSON SENG)

A BILL FOR

An Act relating to the promotion of biodiesel fuel, by providing for tax credits to retail dealers and payments to biodiesel producers, making an appropriation, providing a penalty and including effective date provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I

BIODIESEL BLENDED FUEL TAX CREDIT
   Section 1.  Section 422.11P, Code 2011, is amended by adding the following new subsection:
   NEW SUBSECTION.  1A.  For purposes of this section, biodiesel fuel shall be classified in the same manner as provided in section 214A.2.
   Sec. 2.  Section 422.11P, subsection 2, paragraph a, subparagraph (2), Code 2011, is amended by striking the subparagraph.
   Sec. 3.  Section 422.11P, subsection 2, paragraph b, Code 2011, is amended to read as follows:
   b.  The tax credit shall apply to biodiesel blended fuel formulated with a minimum percentage of two percent by volume of biodiesel classified as B-5 or higher, if the formulation biodiesel blended fuel meets the standards provided in requirements for that classification as provided in section 214A.2.
   Sec. 4.  Section 422.11P, subsection 3, Code 2011, is amended to read as follows:
   3.
  a.  The tax credit shall be calculated separately for each retail motor fuel site operated by the retail dealer.
   b.  The amount of the tax credit is three cents a designated amount multiplied by the total number of gallons of biodiesel blended fuel sold and dispensed by the retail dealer through all motor fuel pumps located at a retail motor fuel site operated by the retail dealer during the retail dealer’s tax year.  The designated amount is as follows:
   a.  For biodiesel blended fuel classified as B-5 or higher but not higher than B-9, two cents.
   b.  For biodiesel blended fuel classified as B-10 or higher but not higher than B-99, four cents.
   Sec. 5.  Section 422.11P, subsection 6, Code 2011, is amended to read as follows:
   6.  This section is repealed January 1, 2012 2015.
   Sec. 6.  Section 422.33, subsection 11C, paragraph c, Code 2011, is amended by striking the paragraph.
   Sec. 7.  Section 422.33, subsection 11C, paragraph d, Code 2011, is amended to read as follows:
   d.  This subsection is repealed on January 1, 2012 2015.
   Sec. 8.  FUTURE APPLICABILITY DATE.  Section 422.11P and section 422.33, as amended by this Act, shall apply to tax years beginning on or after January 1, 2012.
   Sec. 9.  TAX CREDIT AVAILABILITY UNDER PRIOR LAW.  A retail dealer who could claim a biodiesel blended fuel tax credit under section 422.11P or 422.33, subsection 11C, as that section or subsection exists on June 30, 2011, may continue to claim the tax credit for biodiesel blended fuel sold and dispensed by the retail dealer until December 31, 2011, as provided in that section or subsection.
   Sec. 10.  2006 Iowa Acts, chapter 1142, section 49, subsection 5, is amended to read as follows:
   5.  For This subsection applies to a retail dealer who may claim a biodiesel blended fuel tax credit under section 422.11P or 422.33, subsection 11C, as enacted in this Act or as subsequently amended, in calendar year 2011 2014 and whose tax year ends prior to December 31, 2011, the 2014. The retail dealer may continue to claim the tax credit in the retail dealer’s following tax year. In that case, the tax credit shall be calculated in the same manner as provided in section 422.11P or 422.33, subsection 11C, as enacted in this Act that section or subsection exists on December 31, 2014, for the remaining period beginning on the first day of the retail dealer’s new tax year until December 31, 2011 2014. For that remaining period, the tax credit shall be calculated in the same manner as a retail dealer whose tax year began on the previous January 1 and who is calculating the tax credit on December 31, 2011 2014.
   Sec. 11.  EFFECTIVE DATE.  This division of this Act takes effect January 1, 2012.

DIVISION II

BIODIESEL PRODUCTION PAYMENT
   Sec. 12.  Section 422.7, Code 2011, is amended by adding the following new subsection:
   NEW SUBSECTION.  54.  Subtract, to the extent included, the amount of any biodiesel production payment provided pursuant to section 422.132.
   Sec. 13.  Section 422.35, Code 2011, is amended by adding the following new subsection:
   NEW SUBSECTION.  25.  Subtract, to the extent included, the amount of any biodiesel production payment provided pursuant to section 422.132.
   Sec. 14.  NEW SECTION.  422.131  Definitions.
   As used in this division, unless the context otherwise requires:
   1.  “Biodiesel” and“biodiesel blended fuel” means the same as defined in section 214A.1.
   2.  “Biodiesel producer” means a person engaged in the manufacturing of biodiesel who has registered with the United States environmental protection agency as a manufacturer according to the requirements in 40 C.F.R. § 79.4.
   Sec. 15.  NEW SECTION.  422.132  Biodiesel production payment.
   1.  A biodiesel producer may receive a biodiesel production payment by doing all of the following:
   a.  Producing biodiesel for use in biodiesel blended fuel.
   b.  Complying with the requirements of this section and rules adopted by the department pursuant to this section.
   2.  The amount of the biodiesel production payment shall be calculated by multiplying a designated rate by the total number of gallons of biodiesel produced by the biodiesel producer in this state during each quarter of a calendar year. The designated rate shall be as follows:
   a.  For the calendar year 2012, three cents.
   b.  For the calendar year 2013, three cents.
   c.  For the calendar year 2014, two cents.
   3.  To receive a biodiesel production payment, the biodiesel producer must file a claim for each quarterly period of a calendar year as required by rules adopted by the department and on forms prescribed by the department. The claim must be filed on or before the last day of the month following the close of the quarterly period.
   4.  There is appropriated from moneys in the general fund of the state, which are not otherwise obligated or encumbered, an amount sufficient to provide biodiesel production payments to biodiesel producers as provided in this section.
   Sec. 16.  NEW SECTION.  422.133  Penalty.
   A person fraudulently claiming a payment in excess of the entitled amount of a biodiesel production payment is guilty of a serious misdemeanor.
   Sec. 17.  NEW SECTION.  422.134  Repeal.
   This division is repealed on January 1, 2015.
   Sec. 18.  DIRECTIONS TO CODE EDITOR.  The Code editor shall codify sections 422.131 and 422.132 as a new division in chapter 422.
   Sec. 19.  EFFECTIVE DATE.  This division of this Act is effective on January 1, 2012.
EXPLANATION
   GENERAL. This bill provides for the promotion of biodiesel used in the manufacture of motor fuel which is a blend of diesel fuel and biodiesel (biodiesel blended fuel). Biodiesel fuel is designated B-xx where “xx” is the volume percent of biodiesel (Code section 214A.2). For example, all biodiesel blended fuel must be classified as B-1 or higher, meaning at least 1 percent of biodiesel blended fuel by volume must be biodiesel. The provisions of the bill are administered by the department of revenue.
   The bill includes two divisions. First, the bill amends current provisions which establish a biodiesel blended fuel tax credit for retail dealers, and second, the bill provides payments to biodiesel producers.
   DIVISION I —— BIODIESEL BLENDED FUEL TAX CREDIT. Under current law a retail dealer who sells and dispenses diesel fuel from a motor fuel pump is eligible for a biodiesel blended fuel tax credit. The tax credit is multiplied by taking a constant rate of 3 cents multiplied by the number of gallons of B-2 or higher sold and dispensed. The tax credit is due to expire on January 1, 2012.
   The bill eliminates an eligibility requirement specifying that the retail dealer of diesel fuel must sell and dispense 50 percent or more biodiesel blended fuel during the tax year. It increases the minimum biodiesel classification from B-2 to B-5. The amount of the tax credit is changed depending upon the classification. The designated rate for B-5 to B-9 is 2 cents and the designated rate for B-10 to B-99 is 4 cents. The tax credit’s expiration date is extended to January 1, 2015.
   DIVISION II —— BIODIESEL PRODUCTION PAYMENT. The bill creates a program to pay biodiesel producers for production. The amount of the payment is calculated by multiplying a designated rate by the total number of gallons of biodiesel produced during each quarter of a calendar year, beginning in calendar year 2012 and ending in calendar year 2014. The bill appropriates moneys from the general fund of the state to finance the payments. The program terminates on January 1, 2015. A person fraudulently claiming a payment in excess of the entitled amount of a biodiesel production payment is guilty of a serious misdemeanor. A serious misdemeanor is punishable by confinement for no more than one year and a fine of at least $315 but not more than $1,875.